TY - BOOK
T1 - Aviation tax reform
T2 - Consultation Response
AU - Lieven, Nicholas A J
N1 - This document was created by final year aerospace students from the Department of Aerospace Engineering from the the 2021 examination in Aircraft Commerce Operations and Ethics. The document was submitted to the UK Treasury in response to its public consultation on Aviation taxation 15 June 2021.
PY - 2021/6/15
Y1 - 2021/6/15
N2 - Executive Summary: We believe Air Passenger Duty (APD) should be retained both domestically and internationally. The overall approach proposed here is to reduce domestic APD though a lower tariff whilst increasing bands internationally. However, we believe that APD based on distance will become increasingly anachronistic with development in Sustainable Aviation Fuels (SAFs) and more efficient aircraft. Distance alone will not be an adequate proxy for climate impact. The link between distance and emissions will become disconnected and so we propose APD to be based on airframe and engine efficiency thereby encouraging passengers, carriers and manufacturers an incentive to develop and use more efficient aircraft. We provide a draft template on how an Aviation Emissions Tariff (AET) might be structured which should be the subject of a further discussion with industry and consumers.The government’s initial policy position on domestic APDWe recommend that domestic APD is retained – at a reduced level – providing a compromise between the clear Government commitment to reduce emissions and sustainability of the aerospace sector. Removal of domestic APD would be perverse in the light of both the government and industry’s commitment to the 2050 emission reduction goals.A return leg exemptionWe do not support the reintroduction of the return leg exemption. Not only would this be logistically difficult to collect directly via Her Majesty’s Revenue & Customs (HMRC) or the carriers themselves, but also would be inconsistent with international APD which can only be applied to the outbound segment from the United Kingdom (UK); the UK has no jurisdiction over European Union (EU) and International aviation taxation from overseas departure points.A new band for domestic flights. We support a new domestic band for APD which is applied consistently with international banding. Although this would increase the number of bands the collection methodology would be consistent across all departures from and within the UK.International distance bands. We support the proposition for three distance bands according to the “polluter pays” principle. However, we recognise that this will lead to some lost revenue by split journey ticketing and may lead to inconsistent practice between Northern and the Republic of Ireland. Through the inclusion of a domestic tariff, this would bring the combined Domestic/International bands to four.Frequent flyer levy. We do not support a Frequent Flyer Levy (FFL) and propose that APD should remain as the principal tax on the aviation sector. Not only would a FFL be logistically difficult to collect when passenger journeys contain multi sectors using different airlines, but all frequent flyer programs allow accrued points to be used for other services; goods, food and beverage, entertainment etc., and hence would be subject to a plausible deniability challenge.
AB - Executive Summary: We believe Air Passenger Duty (APD) should be retained both domestically and internationally. The overall approach proposed here is to reduce domestic APD though a lower tariff whilst increasing bands internationally. However, we believe that APD based on distance will become increasingly anachronistic with development in Sustainable Aviation Fuels (SAFs) and more efficient aircraft. Distance alone will not be an adequate proxy for climate impact. The link between distance and emissions will become disconnected and so we propose APD to be based on airframe and engine efficiency thereby encouraging passengers, carriers and manufacturers an incentive to develop and use more efficient aircraft. We provide a draft template on how an Aviation Emissions Tariff (AET) might be structured which should be the subject of a further discussion with industry and consumers.The government’s initial policy position on domestic APDWe recommend that domestic APD is retained – at a reduced level – providing a compromise between the clear Government commitment to reduce emissions and sustainability of the aerospace sector. Removal of domestic APD would be perverse in the light of both the government and industry’s commitment to the 2050 emission reduction goals.A return leg exemptionWe do not support the reintroduction of the return leg exemption. Not only would this be logistically difficult to collect directly via Her Majesty’s Revenue & Customs (HMRC) or the carriers themselves, but also would be inconsistent with international APD which can only be applied to the outbound segment from the United Kingdom (UK); the UK has no jurisdiction over European Union (EU) and International aviation taxation from overseas departure points.A new band for domestic flights. We support a new domestic band for APD which is applied consistently with international banding. Although this would increase the number of bands the collection methodology would be consistent across all departures from and within the UK.International distance bands. We support the proposition for three distance bands according to the “polluter pays” principle. However, we recognise that this will lead to some lost revenue by split journey ticketing and may lead to inconsistent practice between Northern and the Republic of Ireland. Through the inclusion of a domestic tariff, this would bring the combined Domestic/International bands to four.Frequent flyer levy. We do not support a Frequent Flyer Levy (FFL) and propose that APD should remain as the principal tax on the aviation sector. Not only would a FFL be logistically difficult to collect when passenger journeys contain multi sectors using different airlines, but all frequent flyer programs allow accrued points to be used for other services; goods, food and beverage, entertainment etc., and hence would be subject to a plausible deniability challenge.
M3 - Other report
BT - Aviation tax reform
PB - University of Bristol
ER -
